IEA forecasts strong global demand growth for crude next year.
IEA forecasts strong global demand growth for crude next year.

Experts Skeptical About Crude Gains in Q1 2018

Experts Skeptical About Crude Gains in Q1 2018

There is little reason to expect oil prices to extend gains through the first quarter of 2018, energy strategists have told CNBC.
The prospect of rising US shale production, subdued price movements and intensifying geopolitical risks is likely to offset a rally in prices at the start of next year, the analysts said.
Harry Colvin, director and senior economist at Longview Economics, told CNBC in a phone interview that he was "pretty bearish" over the price of oil over the next three months.
"While we could easily see an escalation of tensions in the Middle East, in the absence of that, optimism is probably misplaced for up to six months … Everybody seems to be facing the same way over oil at the minute and it's when this happens that you need to be specially careful," he said.
Oil prices have recovered well over a third of their value since hitting 2017 lows in June. The gains are largely due to the global supply cuts implemented by OPEC and non-OPEC producers at the start of the year.
Goldman Sachs said a stronger-than-anticipated OPEC-led commitment to extend production cuts would likely support oil prices through 2018. The US bank lifted its Brent price forecast for next year to $62 a barrel and its West Texas Intermediate projection to $57.5 a barrel. The revisions were up from $58 a barrel and $55 a barrel respectively.
The US Energy Information Administration and the International Energy Agency have both indicated strong global demand growth in 2018 at 1.3% or above.
Colvin said it would be "easy" for oil to go to $50 a barrel by the end of the first quarter, before adding he would "not be surprised" to see levels as low as $45 a barrel.
Despite expecting fundamentals to continue to support the market, Chris Main, energy strategist at Citi, said he forecast oil prices to fall back to around $57 a barrel by the end of the first quarter.
"That price weakness could end up being supportive to the OPEC commitment next year … It would certainly reinforce the will of the Saudis," he said.
The price of oil collapsed from almost $120 a barrel in June 2014 due to weak demand, a strong dollar and booming US shale production. OPEC's reluctance to cut output was also seen as a key reason behind the fall. But, the oil group soon moved to curb production—along with other oil producing nations—in late 2016.

Short URL : https://goo.gl/ok7j2s
  1. https://goo.gl/Fd5nRH
  • https://goo.gl/9VtuDb
  • https://goo.gl/LYgWH1
  • https://goo.gl/S9ijZw
  • https://goo.gl/UyE4fe

You can also read ...

New US State Secretary Could Discourage Global Oil Supply
Incoming State Secretary Mike Pompeo could change foreign...
US Financiers Unwilling to Invest in Aramco IPO
Saudi Arabia’s willingness to delay the initial public...
Zanganeh: OPEC Unlikely to Change Production Deal
Iranian Oil Minister Bijan Namdar Zanganeh said OPEC is...
OPEC and other producers began cutting supply in January 2017.
Oil prices were set to fall this week, despite a slight gain...
Norway's Oil Major Rebrands
Statoil ASA, Norway’s biggest petroleum company, will change...
Plans to Boost Output From 22 Oil, Gas Fields
Talks between the National Iranian Oil Company and domestic...

Add new comment

Read our comment policy before posting your viewpoints